Q3 2020 Yield10 Bioscience Inc Earnings Call

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Welcome to the third quarter 2020 financial results and business update conference call for yield 10 bio science during the call all participants will be in listen only mode. The presenters will address questions from analysts today.

If anyone should require op.

Interest expense during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference call is being recorded.

I would now like turn the conference call over to your host Yokel, Vice President of planning and corporate Communications Lynn.

Thank you Chelsea good afternoon, everyone welcome to yield.

Bio Science third quarter conference call joining me on the call today are president and CEO Dr. Oliver peoples.

Vice President of research and Chief Science Officer, Christy Snow and Chief Accounting Officer, Chuck has or.

Earlier this afternoon yield 10 issued our third quarter 2020 financial results press release.

We also issued a press release announcing our collaboration with Roth Instead research on Omega three oils.

These press releases as well slides that accompany today's presentation are available on the Investor Relations events section of our web site at yield 10 bio Dot com.

Let's now turn to slide two.

Please note this part of our discussion today management will be making forward looking statements. These statements are not guarantees of future performance and therefore, you should not place undue reliance on them.

Investors are cautioned that statements are not strictly historical constitute forward looking statements such forward looking statements are subject to a number of risks and uncertainties that could cause.

The actual results to differ materially from those anticipated.

These risks include risks and uncertainties detailed in yield ten's filings with the FCC.

Leading the Companys most recent 10-K.

The company undertakes no obligation to update any forward looking statements in order to reflect events or circumstances that may arise.

As after the date of this conference call now turn the call over to Ali.

Thanks Lynn good.

Good afternoon, everyone and thanks for joining our call.

Today, we will provide an update on the strong progress we have made toward achieving a 2020 R&D and business objectives.

Including our collaboration with Roth instead resort for technology.

Enabling production of D.A.J., if you look at the oils for your son last culture.

Christie will then highlight a recent R&D activities I will then review the flats also summarize our key milestones for 2020 on New York.

We will then open the call to questions from analysts.

Now, let's turn to slide three our business profile.

No.

Yes that is an agricultural by science company focused on developing innovations for sustainable security fabric.

Got you approached the trait discovery or platform the treaty by Treaty Leverages 30 years of investment and innovation.

Biology to enable this identification that validation of genetic changes to its trades.

The increase performance and productivity across.

For World leaders in major crops developing okay. So their seed and their cost of risk on the research license agreements.

Cali loyalty program is not only core two or 15 discovery process, the troll high potential in its own right.

We are developing commercial.

Camelina varieties as a platform crop for specialty products business focused on nutritional oils and Tha biomaterials.

We also continue to increase our patent position.

We have a strong leadership team and have operations in Woburn, Massachusetts, and Saskatoon, Canada.

Now, let's turn to slide four our market opportunity.

If we see a compelling market opportunity for our business based on our focus on crop trait is driven by four key global trends.

These are global food security, increasing overall demand and the rise of protein consumption.

Health and wellness, where consumers are seeking approval nutritional profiles.

Culture as an increasingly important source.

Supporting all essential or legacy oil that's.

Let's just say little growth metrics for a value chain security climate change effect of key which we believe can be monetized with cost competitive products each.

Each of these trends are addressed by you'll tend to position the company for growth and success.

Well, let's start with slide five.

A recent accomplishments we've.

We've made considerable progress since our call in August.

We strengthened our balance sheet with the raise of 5.7 million in gross proceeds at a public offering and concurrent private placement of common stock.

We completed harvest of all sites in 2020 field testing program.

We are progressing up traits in corn.

Modern cool building a package of data the basis to seek research license partners Leach.

We also took additional steps to advance the Camelina business plan.

Completed harvest the 50 acres of wealth at Catalina in Montana, We we gotta field tested or winter Camelina varieties in the U.S. and caught up with the 2020 2021 winter season.

We signed a collaboration agreement with Rexam side research for the development of DG and EPA Omega three oil technology in Canada.

Now, let's turn to slide six for more detail on Rothamsted rock.

You're welcome said as a world, leading nonprofit and as a premier longest running agricultural research Institute in the World.

The basin leak UK I live and you made numerous contributions the modern agriculture there.

There are also sold to a world leading late stage research programs to producing Omega three oils, considering the fatty acids Tha an EPA sustainably in Camelina cityville.

Research Calkin by Professor John because they feel.

We have signed at least.

The other research collaboration and the two year option to a commercial license to this important technology.

The collaboration will support ongoing research see starts at rock and said you will tell we'll continue to focus on development of elite candidly the germplasm as a foundation for future potential it will get the oils and Tha biomaterial commercial loan.

We anticipate.

<unk> liquid the continued improvement of over 50 oil composition filter.

Field testing and feeding studies and some of the.

A key objective is to support raucous does research as they continue to advise the <unk> Omega three trade optimized with a drop in replacements for southern Hemisphere fish oil.

This is a competitive space.

It's no surprise that the patent landscape and fish oil replacements oilseeds is complex and North America.

Going forward, we will provide more details on the competitive landscape in that we reach out to other parties in the space.

In our communications going forward, we will provide more detail on the competitive landscape.

Roth Instead recently published a review of the growing.

In need and potential of this opportunity.

In the near term, we will focus our business developments in South America.

The DJ in EPA on legacy technology developed a golf upside based on advance.

Much is based on advanced metabolic engineering, and synthetic biology matches or R&D expertise and our capital in the business plan.

I'm going to look forward to having a productive and successful collaboration and bringing forward land based sustainable production of Tha EPA Omega three oils for use in agriculture.

Now, let's turn to slide seven.

And the market opportunity for DG, EPA Omega threes from selling.

The roster technology could clear signal.

To get rolling salmon farming to support sustainable source of Tha EPA on legacy oil.

The chart on the left shows the growth of harvest Alan over the last decade.

And the most recent years farms' salad represents about two thirds of the harvest.

Overall salmon represents about 2% of global protein consumption and as a key source of DHS BPA on bigger.

Reis and essential human Victoria.

Solid production and consumption is poised to grow consumable in years to come one reason for this as as you can see in the chart in the right. Simon has good feed conversion efficiency that is pounds of feet needed to produce a positive mix.

And this will be a key driver as the need for protein sources rises with increasing global.

Man.

Another driver is that the industry has acknowledged that harvesting small fish in the ocean and the source of fish oil Omega threes is unsustainable and overfishing is already a problem.

Therefore, developing land base plant based sources of DFP Omega threes is a critical need and camelina is very well suited.

If it's a platform crop from the production of this oil.

One of our near term market opportunities for Camelina oil based on the high level of Omega three fatty acid Eylea is as a supplement for fish oil and equity.

The alternatives developing this as a basis for establishing commercial operation basically.

Basically phase one for building our Camelina business only.

Additional interim solution with a drop in replacement fish oil being phase two.

Now, let's turn to slide eight the timeline of the rockets and Omega three program.

Over the last several years the rough of 13 has advanced the EPA on literacy program to a high technology readiness level.

From 2017 to 2019.

Based on genetic work started in 2012, the team field tested numerous events deployed and Camelina and good size pilot trials and demonstrates the production of DHS and EPA Omega threes and the Seadrill.

Although the team tested the oil in several feeding studies, including silence sea bass and hope to demonstrate that the metabolism. The plant produced oil.

Product closely mimics harvested fish oil.

This harvest conducted in some case entities published with academic collaborators, having links to the aquaculture industry.

And Tony Tony and welcome start conducting additional field tests of the Omega three coming online, which have been harvested and data is currently being evaluated.

The team planned to.

Conduct feeding trials and some on track this year, but the start of the study will be postponed due to covance.

The foundational work has positioned the program in the late stage of research and the activities today under the collaboration with your kind are intended to position it for commercial development.

You are the objective will be to further optimize the only gets the composition to achieve DFP.

Saudi acid levels to limit some of the hemisphere official for future commercialization, including obtaining regulatory approval for plant and the plant product.

Now, let's turn to slide nine on the sequential launch of the camel in the products business.

The DG EPA on legacy technology fits neatly into our capital in the business plan.

Think hamlin as a platform crop developing advanced camelina traits and only Camelina germplasm.

The general business is focused on natural commonly oil for a range of uses edible oil agriculture and our feet.

The DG EPA Omega three technology opens up the market opportunity for sustainable highly differentiated product for growers and producers.

They'll be alleging leveraging all the technology as we work on technology development are producing PJ vitamin Hill from Catalina.

Taken together, we see a progression of the technology with the market opportunities.

Now, let's turn to slide 10 create progression and major crops.

The best way for you'll tend to capture value from a trace in the logic or to Arthur crop.

Shops, like soybean corn and canola through licensing to leading seed companies, we dominate the space.

Nielsen has executed four nonexclusive research license Cubist AG majors depress addresses specific crops with the option to negotiate a commercial license there.

The arrows in the slide indicate the term of the research license agreements.

We highlighted the.

Licensed the GDN in our loss in our August call. The work is underway to deploy our change in our germplasm.

And ongoing work is progressing by Bayer Forest genetics and supply.

We are currently progressing keep pace and call it lower but we plan to identify partners for these important north American commercial crops as we focus our internal resource.

His and trait discovery Camelina development.

Ill now turn the call over to Christie.

Thanks Ali Hello, everyone there.

The research team has been focused on execution of Caf and Entre discovery and development over the last several months. In addition, we are excited about the collaboration with professor.

So Jonathan May appear and his team as it represents a strategic extension of our technology platform and to DHL and EPA and Mega three oil there.

Our research program is impressive and I am looking forward to further progress since it's a further progress and success in the months ahead.

Let's now turn to slide.

11.

Throughout 2020, we have made steady progress toward achieving milestones in our R&D programs. We completed harvesting for 2020 field test programs at sites in the Us and Canada in the third quarter.

These trials are evaluating several novel seed yield and oil trades.

Camelina and canola.

Data analysis is currently underway and we plan to begin reporting data in the fourth quarter or early 2021.

We are evaluating seed yield seed oil content PHH content and agronomic, depending on the trade, which will provide us with important data.

And in former R&D priorities for 2021.

We continue to evaluate in progress other earlier stage traits in our Camelina pipeline and we have intensified efforts in 2020 to develop advanced commercial camelina varieties those optimized for yield oil content herb.

Beside tolerance and disease resistance.

This work will produce camelina platform varieties for production of nutritional oils, including the DHL and EPA Omega three oil and tha traits.

We will also work on the development of commercial PHH Camelina events.

Throughout 2020, we have.

Continued to advance our yield and or oil trades, and canola and corn, where our plan is to identify partners for research licenses.

And the major commercial crops, we're supporting partners and their ongoing evaluation of our treats.

This includes GTM, who is who has begun working with our treats after signing.

Research license in August as well as Bayer Simplot and forage genetics I.

I would like to thank our team for staying focused on our objectives for 2020 and positioning us to generate a range of data and proof points in the coming months to further develop our camelina technology for specialty products all the way back to you.

Thanks Christie.

Please turn to slide 12, let's cover a few financial highlights.

We ended the third quarter was 11.8 million in cash cash equivalents and short term investments. This.

This includes net proceeds of 5.3 million, we receive from competing offerings of common stock in August we.

We have no debt in our balance sheet.

And your operating cost as much as 2.1 million for the third quarter and $6.3 million for the first nine months of 2020.

We expect our cash on hand, together with expected revenue from our current government Grant will support our operations and the 2021.

Based on our financial results year to date, we remain on track with our estimate might come.

Operating.

Our message for the full year 2020 within the range of 8.5 to 9 million.

We are directing this investment towards executing our business plan.

Let's now review the third quarter operating results.

The company reported a net loss of 2.2 million for the third quarter of 2020 compared to a net loss of $2 million in the third quarter of 2019.

Okay.

Total research grant revenues in the third quarter of 2020 with 204000 versus 224000 in third quarter of 2019.

Our ability to conduct research under the deal you drive was not affected in a significantly fourth quarter at least expect to be able to talk to restructure slotted in the months ahead.

In the third quarter.

By 2020 research and development expenses were $1.3 million and general and admin expenses were 1.1 million. This compares to $1.2 million research development expenses and 1 million of general admin expenses in the third quarter of 2019.

For more details on the financial results. Please refer to the earnings release, and our third quarter 10-Q.

Let's now turn to slide 13 upcoming milestones.

Tony Tony We will continue to focus on the following milestones completing our field 2020 fuel testing program designed to generate agronomic and yield data 63000 polling camelina advance genome editing oil boosting case, including our 89 or two line under since 2007 Camelina.

Lines, we evaluate the Apis report results from the study stabling Q4, 2020, Q1, 2021 actually hitting our field sponsor 2021.

Regarding the Camelina products business plan.

Yes, we'll be talking about developing advanced commercial family varieties with agronomic traits, including how the site tolerance disease.

These resistance and oil in New York.

Developing the commercial launch launch plan for cannabinoids establish agreements for logistics and Tolsey crushing to provide samples of camel and oil and meal for perspective, commercial offtake partners developing relationships with tourists to enable larger see bulk up on acreage expansion in 2021 growing season and.

Success in business development.

Securing strategic industry collaborations and revenue generating commercial create licenses progressing adjacent corn canola, while seeking to secure partners and supporting their GTM forage genetics, simplot, Leonardo rates and the respective crops and underpinning all of this exposure.

Legal intellectual property portfolio without.

With that I'd like to turn the call back over to London for a few questions.

Thanks Ali.

Jesse you can now Paul our analysts for questions.

Thank you, ladies and gentlemen, if you would like to ask a question at this time. Please press star one on your telephone keypad the comp.

Ladies and gentlemen, thank you for your line is your question queue. You May Press Star two if you would like to move our question from the Q.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Our first question comes from the line of Sameer Joshi with H.C. Wainwright. Please proceed with your question.

Yes.

Thanks, Thanks for taking my question.

The first question is about disruption said relationship.

What exactly will you be working on is that the increasing the yield or oil.

Are you content or any other characteristics and then what.

The endpoint.

Are you measuring.

The content of the fish that is a that.

That could be feeds off this or are there further clinical studies in humans that.

Either one.

[laughter] they sold here. Thanks for your question I'll turn that over to Ali at.

At all.

Yeah, Hi, Sylvia good to talk to severe.

You don't know is in reality raucous that nobody progressed, it's not extensively it if not only demonstrated the production though.

Omega three oils with good levels of E G and camelina they've.

We've actually carry the field trials with carrier that recovery process.

Just to purify the oil and they've done extensive fish leading trial.

The number of locations. So what they are really going to do and focus on is really optimizing the trait and has a program that we get on for several years under Jonathan Napiers stewardship, and obviously they are the world experts and.

Only gets the oil production oil seats. So we're delighted to have the collaboration and legato will yield tens billing and in addition to supporting the drops that research programs that actually.

We have an exclusive option to an exclusive license the technology.

Our choice.

More importantly, we are developing advanced line the camera.

Leaner increasingly looking at herbicide tolerance disease resistance, and obviously you are well aware of the of oil Tracey already have and given that the only get three oil business VP of DFP oils business is really about the value of the oil from the seat obviously, increasing oil content is a key financial driver.

As is interesting overall messages. So we're really continuing to do the work we were doing anyway. It's just that as Robin said further enhances the DFP oil trade.

We are building a platform, which ceased and we'll be able to deploy that in the future.

The second thing you'll turn is doing is really looking very extensively.

Near term commercial commercialization based on potential opportunities in South America.

We have still have a fair amount of diligence to do in that location, but we are well aware that Chile is about 30% of global Salmon farm salmon production. So obviously there is a market in South America for these types of products.

On a strong diver towards using more sustainable feed.

In agriculture in general so they're very pleased with this relationship very excited about at the.

The synthetic biologics program and Jonathan has actually occurred over the last decade is remarkable and it's been very successful. So we are likely to be.

Both on land and have the option to secure exclusive rights there.

And so the is there any kind of monetary commitment for this program or is it going to be off of your regular R&D budget.

Hi, actually included in our projections essentially included our projection.

For cost cost as Youre sort of estimated cash gases for next year, we haven't given clear guidance on that but we don't see.

Building the overall burn rate, we are reallocating resources to this and other judiciously.

Understood and then we'll move on to a bank.

Ships media partnership.

Partnerships may or tdm, foreigner edge and simplot or are there any other licensing collaboration is to be expected.

In the remainder of this year and are there other grades that these companies.

We are working with the same company.

Well, so yes, and fighting the GTM situation, we haven't disclosed what rates are working off that stuff at their request.

But in addition to the noted the fact that we are looking for potential partners of canola and current production rates are.

We really have been looking pretty extensively at.

Potential partners downstream partners and the camel in the business, there's obviously a growing demand for.

Increasing vegetable oil per acre of land in North America to supply the I would say the margin.

Interest in what we call renewable diesel from Ali for the California markets.

It's not something that we are pursuing themselves.

But certainly certainly we see opportunities in.

In terms of the products that we intend to make for potential agreements.

As we move into the PJ biomaterials, which we Didnt speak talk talk very much about today that program is moving right ahead.

Actually producing PJ biomaterials.

He wants to address several markets, including water treatment applications feed applications.

Bio plastics applications, which has enormous potential.

Hopefully later this year and next to report the data we have generated from this year's field trials with the PSC biomaterials, but again when you look at the potential number of.

Partners in those areas, it's it's a multiple of.

What's possible when you talk about treats just for the major crops.

Understood.

Good effort do there's going to be going to fill this data is there any preliminary high level information that you could share.

At this.

Or should we just wait for you to think of them published I think its too early it's too early to provide any kind of guidance on that Samir I think obviously, we'll just wait we're going to have a data and then we can provide a very clear picture as the program.

Okay. One last one on on cash usage of 8.5 to 9 million.

Right.

Does that.

Uhhuh any onetime cash usage that you may have incurred for example for the.

Capital raise or some other activity.

Yes, that's that's basically the total all in I think that that's where we are so I think you know with respect to.

Where we are at Kassere juices as pretty much on the money with respect to what.

Expected to spend this year.

Selling a little from last year, but thats actually related to some savings related to.

Essentially a real estate situation, but we are able to take advantage of a sublease to reduce our costs.

Some other minor.

Savings, but.

But generally speaking we've kept the flow through R&D program on them all to the cobot situations. So we'll continue to spend as we planned on the R&D programs.

We have saved some some cash on real estate related issues.

Listen Thanks, a lot Alan.

You're welcome.

Thank you our next year.

Our next question comes from the line of Robert Leboyer with Ladenburg Thalmann. Please proceed with your question.

Hi.

I had a question about the Rossum Stan agree.

Agreement and if I'm understanding it.

They've been doing this work.

Filmmaker threes in Camelina and use of licensed some of your technology that they will use going forward and you will have the option to take their license to commercialize this am I right. So far.

No no not quite.

So let me just be quite clear about this what we've done is we've agreed to finding tutors financially support the ongoing research program, which as you pointed out has been ongoing and GDP growth instead now for a number of years in.

In exchange for that financial support to be providing to research program.

Well they are guiding in developing on the road.

We get an exclusive option to.

To an exclusive license to the technology, obviously, that's that's why we did it.

So really what they are doing is continuing the program that we had ongoing yield tennis stepped into to support supporting financial.

We get is a tremendous opportunity.

Auto Cavalier platform.

So that you would be using their discoveries in your camelina right. So is it going to ultimately be the same as for example, we have a license an exclusive license to the SIFI thousand Southern State University of Missouri, which.

Yeah.

Obviously.

Have achieved.

Approval I guess, the first or both.

It Camelina Angie the Medici canola lines this last year.

Similarly, we would have an exclusive license to be the commercial partner for Roper said, it's almost a three hour technology.

Okay. So just.

The same way that you had license trades and from from universities before you utilize giving me the Omega three from Roth them said is that I think the difference yeah. I think the difference is it as regards.

The the technology from Rothmans that is obviously at a pretty advanced level in that they have already developed.

Alex.

I want to get three oil trade and they are working on further improvements to that obviously the belief is that they can ultimately get to what would be the gold standard of the industry, which as a drop in land based sustainable replacement for the southern Hemisphere official.

The reason is the gold standard this because.

Levels of EPA and DG in the southern Hemisphere should show which comes from.

Guests from sardines, and Portrazza with vendors.

Got it.

It's the highest value financially obtain from from from each other so.

Would be a tremendous position to happen and that our view based.

Based on the papers the graben.

The other resource we've done it's pretty clear they have the best answer to this so far.

Okay and it sounds as if the.

The end product is going to be producing Omega three in camelina.

Got it all down basically.

But essentially it will be as well.

There will be the second of our oil that nutritional oil product, especially attrition wireless camelina oil as it is today.

And they are the markets, our human nutrition, but also as useful as a supplement and aquaculture feed because they contain.

One Omega three fatty acid cold eylea awful in Oneq.

But can be conducted by some species.

Into small amounts of EPA and DJ so its a better as a better solution than killing them soybean oil for example, but it's not it's not going to be the solution.

Thats required which is.

The client base oil the tie in both EPA and DHL fatty acids.

At similar levels to Sabal embassy official guidance.

Oh I see so this would be feed for our culture, but not accurate exactly changing the salmon themselves or the fish being really.

Raised in agriculture.

Yes. This.

This is just what's really.

And just to be making a plant that will be either used to extract the oil for humans or fed to the fish catch.

Correct.

Exactly exactly so this would be well it would be a nutritional oil products.

It's just going to per mile agriculture reduces.

And negatively I believe it will end up also.

Also being used in chicken and other other fleets, it's a systems.

Okay and in the previous question you mentioned that there's there are no signing fees.

Is that right and it will just be part of your normal research project. At this stage is just part of a normal results. If we execute a commercial license in the future that we will be entering a fairly typical commercial licensing ventures.

Okay. This is slightly healthier on the topic of commercial licenses is there anything foreseeable in the coming year.

I think the guidance, we provided another sort of late 21 to 22.

In the event, but any other potential partners Bayer.

GTM Simplot, our forest genetics.

Really see value in the traits that they're testing.

Okay, great. Thank you very much.

You're very welcome.

Thank you. Our next question comes from the line of not all luck with Maxim Group. Please proceed with your question.

Hi, This is Matt bullet gone for Anthony Vendetti, Thanks for taking my question.

My question relates to the report data for the candidly then can all at your plan on reporting in the fourth quarter or early 21.

What do you feel like some of the most important aspect of this data read out and if the results are positive. What are you what are the next steps and what conditions all from me.

Yes. So obviously most of the work is primarily focused on Camelina, primarily focus catalina or oil content using genome editing.

Traits.

Since 2007, and Athree line or two I. We're also testing for the first time.

Well the second time.

50000 for actuate.

Great and the conversion of which would actually be a regulated trade under the GE and all that.

So that's what we're testing and what we're looking for is how well the department store and Phil.

Nor do we see things are indicative of increased performance, but.

But ultimately it comes down to oil case, do we see higher oil per acre.

In the field, obviously, we see hostage locally.

Okay. Thanks, that's very helpful I'll hop back in the queue.

[noise].

Oh.

Thank you and it appears we have no additional questions at this time, so I'd like to pass the floor back over to Lynn for any additional closings.

Thanks, Jesse I'll turn the call back to Ali for closing remark.

Okay. So as you know we May school measured progress across several crucial areas. This year.

Most recently signing a research license with GBM, So I'd sales.

Sailing acquiring for Rob, there's often said advancing our pipeline of traits and strengthening our balance sheet. In addition over the course of play play their.

Both of our business cloud can lead all have come together, we believe the green platform can be used to address a wide range of creating a broader area.

These troughs unable to develop on the NEMA development of advanced Campbell in providing a large scale production of proprietary specialty products.

Let me present pursuing three distinct revenue opportunities licensing it will yield the performance states for use in major crops product sales based on our Camelina clock on purpose of nutritional oils and Phd biomaterials.

You see the industry collaborations in R&D revenues.

I'd like to personally thank all of you for joining us on the call Tonight, and especially our shareholders for your continued support and I want to thank everyone. In your tenant for setting it's on track to reach our goals in 2020 have a nice evening.

Ladies and gentlemen, you may now disconnect.

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